Short-term Poverty Dynamics in Rural Indonesia during the Economic Crisis


Abstract

During the economic crisis, the poverty rate in Indonesia changed relatively quickly in short periods of time, implying that there were a large number of households which moved in and out of poverty relatively frequently and experienced relatively short periods of poverty. Using panel data of over 10,000 rural households which were visited four times in 14 months, this study finds that changes that took place at the household level were even greater than what were indicated by the aggregate figures. The total number of households which experienced a change in their poverty status have always been found to be substantial and much greater than the change in poverty rate. Hence, looking only at the changes in the total poverty rate could give a misleading impression on the actual poverty dynamics of households. The analysis also indicates that in order to be invulnerable to poverty, households need to have a mean real per capita consumption over time which is substantially higher than the poverty line.


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